1. The Field of the Invention
The present invention relates to customer relationship management (CRM) and the evaluation and enhancement of customer relationships in a business to business context and, more particularly, the present invention relates to systems methods and computer program products for evaluating and enhancing customer relationships, particularly in a business-to-business environment, by generating actionable inferences through the measurement and analysis of customer satisfaction and customer importance and by prioritizing and optimizing the use of vendor resources.
2. The Relevant Technology
In today's global and increasingly competitive business environment, the management of customer relationships; namely, the identification, acquisition, development and retention of customers, has emerged as the key determinant of business success. This emergence of Customer Relationship Management (CRM) as one of the most prominent fields of management theory and research and an area of focus for organizations has resulted in a shift in the general approach towards customers and the marketing of products and services to them. This shift from a transactional to a customer relationship approach has emerged as one of the most important components of the overall corporate strategy.
The prior art in the related field can be categorized into the three broad areas of management literature, software solutions and existing business systems in the field of business-to-business Customer Relationship Management. While management literature has, in the recent past, started incorporating the business-to-business perspective in CRM literature more from a conceptual perspective, existing software solutions are not specific enough in terms of the underlying constructs or models used, and conventional methods and systems fail to recognize and address the new challenges of business-to-business CRM as identified by contemporary management literature as summarized herein. Hence, a major part of the description of prior art in the related field draws from extant management research.
One of the primary areas of focus of CRM and research work in the related field, throughout its evolution, has remained that of customer satisfaction. The concept of customer satisfaction and its role in corporate and marketing strategy has been investigated extensively in customer relationship management and service quality literature, including: “Effects of Expectations and Disconfirmation on Post Exposure Product Evaluation” and “A Cognitive Model of the Antecedents and Consequences of Satisfaction Decision” by R. L. Oliver in 1977 and 1980, respectively; “An Investigation into the Determinants of Customer Satisfaction” by G. A. Churchill G. A et al., 1982; and “The Antecedents and Consequences of Customer Satisfaction for Firms” by E. W. Anderson et al., 1993.
A large body of literature is available today on the topic—ranging from varying definitions of the term and varying opinions on its validity as a measure of the health of a relationship, to different statistical approaches of varying complexity used to quantify the measurement of such satisfaction. This literature includes “Measuring and Managing Customer Service in Industrial Firms” by M. Morris et al., 1992; “Improving Service Quality in an Industrial Setting” by S. A. Moore et al., 1994; “Modeling the Determinants of Customer Satisfaction for Business-to-Business Professional Services” by P. G. Patterson et al., 1997; “Customer satisfaction in Industrial Markets—Dimensional and Multiple Role Issues” by C. Homburg et al., 2001; and “Customer Satisfaction Measurement in a Business to Business Context: A Conceptual Framework” by J. Rossomme, 2003. What has remained constant, however, apart from a complete lack of consensus on the utility of the process, is the relative lack of development of the concept as it may apply in a business-to-business scenario.
It is only in the last few years, that a significant amount of management analysis and writing work has been done in the area of the measurement and monitoring of customer satisfaction in business-to-business contexts, including “Customer Satisfaction Measurement in a Business to Business Context: A Conceptual Framework” by J. Rossomme, 2003; “Customer Satisfaction in Industrial Markets; Opening up the Concept” by H. Tikkanen et al., 2000; and “Improving Service Quality in an Industrial Setting” by S. A. Moore et al., 1994. This literature has taken off from where traditional CRM research left, by incorporating the various models of organizational buying behavior that have evolved over time. Where these studies have contributed the most is in the identification of the areas where extant CRM literature fails when applied to customer satisfaction in an organizational buying process. Such contemporary management literature and studies have highlighted the key challenges in applying traditional concepts of customer satisfaction in industrial contexts. These challenges can be summarized in six ways, as follows.
The first challenge includes measuring the level of satisfaction of an entire customer organization for comparison with the level of satisfaction of another customer organization. This differs significantly from traditional CRM analysis that focused on an individual's satisfaction with a specific product/service and the related consumption experience. Current methods and systems are not built in a way that focuses on the measurement and subsequent analysis of satisfaction data as between two or more organizations.
The second challenge is avoiding the limiting assumption of most contemporary research in the field, relating to the use of a ‘key informant’, or a single contact within the customer organization to provide a comprehensive assessment of organizational satisfaction. Even where some extant literature attempts to propose methods for the measuring organizational customer satisfaction, the assumption that there exists a single source of reliable measures of the health of the relationship health renders the exercise inadequate and its results unreliable.
The third challenge incorporates the contemporary definition of satisfaction as a psychological process indicative of customer ‘levels of consumption related fulfillment,’ as described by Oliver (1997), which ignores the feedback from key customer organization personnel who are not direct consumers of the vendor organization's products or services. In organizational contexts, as pointed out by Rossomme (2003), this poses two major problems. First, ‘many customer employees will not have direct consumption experience to base their judgments on’, and second, there is an added dimension of ‘concrete, rational objectives’ in the determination of satisfaction. This problem of multiple touch points, some of whom might play a decision making role without any direct consumption experience, has not been addressed or incorporated into existing models of customer satisfaction analysis or measurement.
The fourth challenge relates to the realization that given the complexity of buyer-seller relationships, including the number of individuals, levels and multiple interactions involved, a comprehensive independently existing and uniform state of satisfaction does not exist in any organization context. (Tikkanen (2000). As will be elaborated on later, this is all the more relevant in enterprise to enterprise relationships and such limitations of extant methods is a key area that this invention addresses by providing a practical solution. Most existing systems focus around the generation of average measures of satisfaction for the organization, which do not take into account the complexity of ‘organizational satisfaction’ and ‘organizational decision making’.
The fifth challenge is that a lot of managerially relevant contextual information is either concealed, ignored, overlooked or disguised in the form of objective numerical results that are claimed to represent the ‘average’ level of satisfaction in the customer organization on the one hand and in the total customer base on the other. (Tikkanen et al., 2000). Accordingly, complex relationships, as exist in the business-to-business context, do not lend themselves to standardized rules based on overall average measures of satisfaction. Instead, each relationship is unique and relationship analysis and enhancement actions need to take into account contextual information.
The sixth challenge is to consider that every individual's motivations are driven by his/her individual perceptions, past experiences and personal goals/responsibilities, such that individual assessments of satisfaction will to a large extent depend on the ‘individuals’ current goals and existing areas of responsibility. (Tikkanen et al., 2000). However, existing systems do not take into account the fact that ‘reported’ satisfaction is not only a function of the consumption experience but also of the key areas of responsibilities of the informant and his/her immediate concerns and goals.
While the works of research mentioned above and the many others preceding them have covered a substantial amount of ground in understanding the nuances of the organizational buying process and the implications it holds in the measurement of customer satisfaction, there are both added dimensions of complexity and a lack of practical models that can be applied for effective customer relationship management in a business-to-business context. However, given the complexity of organizational relationships and the organizational buying process, there cannot be a practical solution to the superset of business-to-business customer relationship management. Hence, while the model has been developed for an Enterprise Information Technology (IT) Solution vendor-customer relationship, the characteristics and problems remain the same in any business-to-business scenario characterized by a high-involvement, group decision making process, a situation wherein the delivery of the product/service makes up a substantial part of the vendor-customer interaction, a long cycle of engagement including substantial after sales support, and organization wide impact of decisions.
As defined herein, the term “business-to-business relationship” generally refers to a generic business-to-business relationship with the above mentioned characteristics. It will be appreciated, however, that business-to-business relationships, as defined herein, can also extend beyond the Enterprise IT Solutions industry, for which this framework has been specifically developed. In particular, business-to-business relationships can also include large scale infrastructure projects, construction projects, financial services, research and consulting projects etc.
Though the model being described has been developed taking enterprise IT solution industry in mind, similar approaches can also be applied to other business-to-business cases as well with suitable modifications as the fundamental problems for addressing the customer relationship issues are fairly similar across different business-to-business situations.
Apart from the issues in applying traditional concepts of customer satisfaction in industrial contexts as outlined above, the measurement of customer satisfaction from a practical point of view, poses even greater challenges in the context of business to business relationships. Some of these key challenges taking the specific case of an enterprise IT solution vendor-customer relationship are described below.
Initially, there is problem of varying individual expectations within customer organizations, which gets accentuated in the enterprise IT solutions context given the high level of involvement of the customer organization and hence, the wide profile of individuals involved in decision making. For example where the vendor seeks to provide an enterprise solution, such as an Enterprise Resource Planning Solution, the people involved in the decision making process would typically include the CEO of the customer organization, the functional heads, the CIO/CTO and the End-Users. In addition, given the extended service cycle (as a sale cycle would consist of the sales pitch, delivery, implementation, customizations and post-implementation support), which stretches from a few months to a few years, the requirements and expectations of these individual groups tend to vary over that period of time.
The enterprise solutions industry has also failed to provide a standard software solutions package at a standardized price. Instead, each sale or contract has its own unique features, and is to a large extent, never replicated. Thus, there is a high variability in the revenues, both in terms of absolute value as well as in the structure of payments, across customers for what are apparently similar implementations. In such a scenario, it is imperative to be able to arrive at a meaningful method to determine the importance of a customer which should play a deciding role in the allocation of organizational resources to improvement initiatives.
In addition to the above mentioned variability in expectations arising from the varying needs and responsibilities of individual respondents within the customer organization, another factor that plays an important role in determining the reliability of satisfaction measures in the present context is the long engagement cycle. For example, the sale of non-packaged software products are invariably accompanied by consulting services, implementation and post-implementation support services. The complete cycle of activities could last for a period varying from a few months to a few years. Given this fact, the reported scores of satisfaction tend to be determined to a large extent by events in the immediate past thus making these measures more volatile and less reliable as measures of overall satisfaction. Therefore, to be able to arrive at reliable scores of satisfaction, both at the individual and organizational level, such volatility (arising out of recent events) needs to be identified and neutralized.
The end results that a vendor organization expects to achieve by focusing on customer relationships and customer satisfaction include an enhanced lifetime value of the customer through retention of customers, revenue growth through cross-selling opportunities as well as successful referencing to prospects for generating new business. However studies in the Business to Consumer space have shown that the link from customer satisfaction to modified vendor behavior and eventually greater vendor profitability is weak and statistically insignificant, as described in“The Mismanagement of Customer Loyalty” by W. Reinartz et al. in the Harvard Business Review (2002).
Accordingly, given the complex process of purchase decisions in business-to-business transactions such as enterprise information technology solutions and the multifarious factors leading to customer profitability, an exercise seeking to compute the statistical correlation between customer satisfaction and profitability might not be rigorously accurate or precise. However, from a practical and business oriented point of view the determination and assigning of a meaningful value to the customer relationship having two dimensions i.e., customer satisfaction and customer importance would enable the vendor to optimally allocate its resources, which in turn is likely to be one of the important factors for increasing the overall profitability of the vendor.
There is considerable literature that has documented the problems faced in industrial settings in the practical applicability of Customer Satisfaction Studies in affecting any parameters of business performance. The main, problem with the existing approaches to the measurement and monitoring of satisfaction, however, is that it is almost impossible to keep an entire organization motivated by a notion as intangible as customer satisfaction. Therefore, customer satisfaction must be translated into a number of measurable parameters and definite actionable inferences that vendor employees can understand and utilize in customer relationship enhancement.
Accordingly, in view of the foregoing, it is apparent that the existing prior art fails to provide any practical system or method for the evaluation of customer relationships and for the allocation of resources based on the same in a business-to-business context. Therefore, there is a need for improved systems methods and computer program products that can address the special needs of customer relationship management and enhancement in an enterprise IT solution vendor customer relationship. This is particularly true when considering special needs such as the differing expectations of key contact points in the customer organization, the effect of long life cycle interactions and its impact on individual and organizational expectations, the contextual information needed to support, supplement and make more meaningful and practically useful, any analyses of the state of the relationship, the need for ‘iterative’ if not ‘real time’ feedback to eliminate ‘recent episode’ bias, time-cycle based needs and need shifts, and the link from customer satisfaction to customer value enhancement taking into consideration relative customer importance and the need for the optimization of vendor resource allocation.
There is also a need for a method for measuring and monitoring customer satisfaction in the enterprise solutions industry that focuses on the extracting relevant and useful areas of improvement that the organization can focus its resources on, which would also incorporate the value of the customer to the firm while prioritizing action areas.